Multiple board appointments and firm performance in emerging economies: Evidence from India

Jayati Sarkar () and Subrata Sarkar ()
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Jayati Sarkar: Indira Gandhi Institute of Development Research

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: The relation between multiple directorships, busy directors and firm performance has been researched predominantly in the context of developed economies, notably the US. This paper extends the existing literature on multiple directorships in two ways; first, by providing additional evidence on its effect on firm performance, but with respect to an emerging economy, India, and secondly, by suggesting an alternative measure of directorial "busyness" that is more general in its applicability compared to those that have been applied in the existing literature. Using a sample of 500 large firms from the Indian corporate sector for the year 2002-03, the paper finds multiple directorships by independent directors to correlate positively with firm value thereby supporting the "quality hypothesis" that busy directors are likely to be better directors, a result that is different from the existing evidence on busy directors. Multiple directorships by insider directors are, however, negatively related to firm performance. Estimation of group and non-group companies separately reveals that the quality effect of independent directors persists for the former but disappears for the latter. In general, the results suggest that the relation between "busy" directors and firm performance may depend on the institutional context and on the type of director

Keywords: Multiple Directorships; Busy Directors; Firm Performance (search for similar items in EconPapers)
JEL-codes: G30 G39 K22 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2005-01
New Economics Papers: this item is included in nep-bec and nep-cwa
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Multiple board appointments and firm performance in emerging economies: Evidence from India (2009)
Working Paper: Multiple Board Appointments and Firm Performance in Emerging Economies: Evidence from India (2005)
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